Definition
At the Money (ATM)
An at-the-money option has a strike price equal to (or closest to) the current price of the underlying.
When Nifty trades at 24,150, the 24,150 strike (or the nearest listed one, like 24,100 or 24,200) is the at-the-money option. ATM options have the highest time value, the highest gamma, and a delta near 0.5, making them the most sensitive to both direction and decay.
Many NSE strategies are built around the ATM strike — short straddles sell the ATM call and put, and traders watch ATM implied volatility as the cleanest read on market nervousness. On expiry day, the ATM strike is where gamma and pin risk concentrate.
Related terms
- GammaGamma measures how fast an option's delta changes as the underlying moves — the rate of change of delta.
- MoneynessMoneyness describes where an option's strike sits relative to the current price — in, at, or out of the money.
- Max PainMax pain is the strike price at which the largest number of option buyers would lose money on expiry.
- Short StraddleA short straddle sells a call and a put at the same strike to profit when the underlying stays calm and range-bound.
Plain-English explainer from The Dispatch Investors Encyclopedia. General information, not financial advice.